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Facts
The assessee, Mukul Rani Thakur, a senior citizen, filed her return for AY 2021-22 declaring NIL capital gains on a property sale by investing in bonds u/s 54EC. During a search on a third party, incriminating material (kachchi parchi and WhatsApp chats) was found, indicating under-reported sale consideration for the assessee's property. The Assessing Officer (AO) made an addition of INR 97,37,300/- to her Long Term Capital Gain, assessing her income under Section 143(3) with approval obtained under Section 119, instead of Section 153D.
Held
The Tribunal held that the assessment should have been completed under Section 153C of the Income Tax Act, given that the income pertained to material found during a search on a third party and the relevant assessment year fell within the block period as per the provisions of Section 153C. The AO's action of proceeding under Section 143(3) and obtaining approval under Section 119 instead of the mandatory Section 153D constituted a jurisdictional error. Therefore, the assessment order was declared void ab-initio and quashed.
Key Issues
1. Whether the assessment framed under Section 143(3) was valid when the matter pertained to undisclosed income found during a search on a third party, necessitating assessment under Section 153C. 2. Whether the assessment order was invalid due to the absence of prior mandatory approval under Section 153D, given that approval was obtained under Section 119.
Sections Cited
250, 143(3), 153D, 153C, 153C(1), 132, 143(2), 153A, 153A(1), 119, 54EC, 153B(1)(b)
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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI PRADIP KUMAR KEDIA & SHRI PRADIP KUMAR KEDIA & SHRI PRADIP KUMAR KEDIA & SHRI VIMAL KUMARSHRI VIMAL KUMAR
1. The instant appeal has been filed at the instance of The instant appeal has been filed at the instance of the assessee seeking assessee seeking to assail the First Appellate order dated to assail the First Appellate order dated 08.02.2024 passed by Ld. passed by Ld. Commissioner of Income Tax (A) Commissioner of Income Tax (A)-30, New Delhi [“Ld.CIT(A)”] u/s 250 of the A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated Income Tax Act, 1961 [“the Act”] arising from the assessment order dated Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 30.12.2022 passed u/s 143 43(3) of the Act pertaining to Assessment Y Assessment Year 2021- 22.
2. The grounds of appeal
raised by the The grounds of appeal raised by the assessee read as under: read as under:- 1. “The Ld.CIT(A) has erred both on facts and in law in not quashing Ld.CIT(A) has erred both on facts and in law in not quashing Ld.CIT(A) has erred both on facts and in law in not quashing the assessment order ignoring the fact that no approval u/s 153D the assessment order ignoring the fact that no approval u/s 153D the assessment order ignoring the fact that no approval u/s 153D was obtained before passing of the above order. was obtained before passing of the above order.
2. The impugned order of assessment u/s 143(3) of IT Act is not valid The impugned order of assessment u/s 143(3) of IT Act is not valid The impugned order of assessment u/s 143(3) of IT Act is not valid in law as the same has been passed in complete defiance of the e same has been passed in complete defiance of the e same has been passed in complete defiance of the provision of sec 153C of IT Act as the assessment provision of sec 153C of IT Act as the assessment order order has been passed taking adverse view of the material found in the course off passed taking adverse view of the material found in the course off passed taking adverse view of the material found in the course off search on the third person and the assessment year under search on the third person and the assessment year under search on the third person and the assessment year under consideration wa consideration was not the year of search in view of the provision to s not the year of search in view of the provision to sec 153C(1) of IT Act and the assessment was not an abated sec 153C(1) of IT Act and the assessment was not an abated sec 153C(1) of IT Act and the assessment was not an abated assessment.
3. The Ld.CIT(A) has erred in confirming the addition of Rs.97,37,300/ The Ld.CIT(A) has erred in confirming the addition of Rs.97,37,300/- The Ld.CIT(A) has erred in confirming the addition of Rs.97,37,300/ under the head long term capital gain on the basis of the di under the head long term capital gain on the basis of the digital under the head long term capital gain on the basis of the di evidences found from the digital devices of other individuals without evidences found from the digital devices of other individuals without evidences found from the digital devices of other individuals without appreciating the fact that same were not found corroborated from appreciating the fact that same were not found corroborated from appreciating the fact that same were not found corroborated from the facts on record record and the digital evidences shared were not and the digital evidences shared were not backed by a valid certificate of authentication requi backed by a valid certificate of authentication required u/s 65B of red u/s 65B of Indian Evidence Act. Indian Evidence Act.
The assessment The assessment order under appeal is unsustainable in law as the appeal is unsustainable in law as the same has been passed taking cognizance of the so called same has been passed taking cognizance of the so called same has been passed taking cognizance of the so called incriminating material found from a third person without the third incriminating material found from a third person without the third incriminating material found from a third person without the third person and also the counter p person and also the counter party i.e. buyer in the deal of sale of arty i.e. buyer in the deal of sale of flat, examined by the Ld.AO with reference to the material adversely flat, examined by the Ld.AO with reference to the material adversely flat, examined by the Ld.AO with reference to the material adversely relied upon and without providing opportunity of cross examination relied upon and without providing opportunity of cross examination relied upon and without providing opportunity of cross examination of the said witness to the appellant assessee to link the appellant to of the said witness to the appellant assessee to link the appellant to of the said witness to the appellant assessee to link the appellant to so called incriminating material. incriminating material.
5. The impugned assessment is invalid and without jurisdiction as the The impugned assessment is invalid and without jurisdiction as the The impugned assessment is invalid and without jurisdiction as the said assessment is completed said assessment is completed said assessment is completed without complying without complying without complying with the with the with the mandatory CBDT instructions/guidelines.” mandatory CBDT instructions/guidelines.”
3. The assessee is a senior citizen and The assessee is a senior citizen and 66 years old lady. The . The assessee filed her return of income for Assessment Year 2021 her return of income for Assessment Year 2021-22 on 02.11.2021 02.11.2021, declaring total income of INR 6,98,900/ total income of INR 6,98,900/-. The assessee declared income from sale of income from sale of equity shares and income equity shares and income from other source in the form of interest and from other source in the form of interest and dividend from Indian companies. During the year under companies. During the year under consideration consideration, the assessee sold house property situated at Preet Vihar, Delhi for INR 49,00,000/ assessee sold house property situated at Preet Vihar, Delhi for INR 49,00,000/- assessee sold house property situated at Preet Vihar, Delhi for INR 49,00,000/ and invested the sale proceeds in purchase of capital gain bonds u/s 54EC of and invested the sale proceeds in purchase of capital gain bonds u/s 54EC of and invested the sale proceeds in purchase of capital gain bonds u/s 54EC of the Act of the same amount and thus, declared the Act of the same amount and thus, declared capital gains from property at capital gains from property at Page | 2 NIL. The case of the assesse NIL. The case of the assessee was subjected to scrutiny assessment u/s 143(3 to scrutiny assessment u/s 143(3) of the Act. In the course course of assessment, in a show cause show cause notice dated 15.11.2022, the Assessing Officer (“AO”) referred to search conducted at 15.11.2022, the Assessing Officer (“AO”) referred to search conducted at the 15.11.2022, the Assessing Officer (“AO”) referred to search conducted at premises of one Shri Praveen Kumar Jain, a third party and also referred to a premises of one Shri Praveen Kumar Jain, a third party and also referred to a premises of one Shri Praveen Kumar Jain, a third party and also referred to a kachchi parchi image which is stated to be found from the mobile phone of image which is stated to be found from the mobile phone of image which is stated to be found from the mobile phone of Shri Vaibhav Jain which is alleged ri Vaibhav Jain which is allegedly pertain to sale of property at Pr ertain to sale of property at Preet Vihar, Delhi. The assessee filed reply and denied any privy to such Delhi. The assessee filed reply and denied any privy to such ka kachchi parchi found on the mobile phone of such party. The AO however, relied upon found on the mobile phone of such party. The AO however, relied upon some found on the mobile phone of such party. The AO however, relied upon whatsapp chat and held that the assessee has under whatsapp chat and held that the assessee has under reported reported sale consideration on sale of Long Term sale of Long Term asset being property at Preet V Preet Vihar, Delhi to the tune of INR 1,05,50,000/ to the tune of INR 1,05,50,000/-. The AO re-computed the Long ong Term Capital Gain (“LTCG”) and made addition of INR 97,37,300/ and made addition of INR 97,37,300/- at estimated sale at estimated sale consideration based on kachchi parchi consideration based on kachchi parchi. The income was accordingly . The income was accordingly, assessed at INR 1,04,36,200/- u/s 143(3) of the Act. As per para 13 of the assessment u/s 143(3) of the Act. As per para 13 of the assessment u/s 143(3) of the Act. As per para 13 of the assessment order, it was asserted by the AO that the assessment it was asserted by the AO that the assessment order was passed with the order was passed with the prior approval of the Ld. prior approval of the Ld. Additional CIT, Central Range-8, New Delhi as 8, New Delhi as accorded vide F.No.Addl.CIT.CR Addl.CIT.CR-8/Approval/2022-23/1887 dated 30.12.2022. 23/1887 dated 30.12.2022.
4. Aggrieved by the additions, the assessee preferred appeal before the by the additions, the assessee preferred appeal before the by the additions, the assessee preferred appeal before the Ld.CIT(A) without any avail. Ld.CIT(A) without any avail.
5. Further aggrieved, the assessee preferred appeal before the Tribunal. the assessee preferred appeal before the Tribunal. the assessee preferred appeal before the Tribunal.
The Ld. Counsel for the assessee at the outset, adverted to Ground No.2 for the assessee at the outset, adverted to Ground No.2 for the assessee at the outset, adverted to Ground No.2 of the grounds of appeal
and pointed out that this Ground is essentially in the of the grounds of appeal and pointed out that this Ground is essentially in the of the grounds of appeal and pointed out that this Ground is essentially in the nature of additional ground. An application for nature of additional ground. An application for admission of ground, treating ground, treating the same as additional ground ground was referred. It was submitted that the ed. It was submitted that the aforesaid ground seeks to challenge the jurisdiction of the AO assumed u/s aforesaid ground seeks to challenge the jurisdiction of the AO assumed u/s aforesaid ground seeks to challenge the jurisdiction of the AO assumed u/s 143(2) of the Act in the light of decision rendered by the Hon’ble Delhi High 143(2) of the Act in the light of decision rendered by the Hon’ble Delhi High 143(2) of the Act in the light of decision rendered by the Hon’ble Delhi High Court in the case of Pr.CIT & Anrs vs Ojjus Medicare P.Ltd. & Ors. Pr.CIT & Anrs vs Ojjus Medicare P.Ltd. & Ors. in ITA Pr.CIT & Anrs vs Ojjus Medicare P.Ltd. & Ors. No.52/2024 dated 03.04.2024. 03.04.2024. The Ld. Counsel for the assessee pointed out for the assessee pointed out that the ground raised is legal ground for at the ground raised is legal ground for which, relevant facts are available on ch, relevant facts are available on record and thus, urged urged for admission thereof in the light of in the light of judgements Page |
3. National Thermal Power Co.Ltd. vs CIT 229 ITR 383 (SC) ational Thermal Power Co.Ltd. vs CIT 229 ITR 383 (SC) ational Thermal Power Co.Ltd. vs CIT 229 ITR 383 (SC) and Jute Corporate of India Ltd. vs CIT 187 ITR 688 (SC). Jute Corporate of India Ltd. vs CIT 187 ITR 688 (SC).
7. The issue raised as per as per additional ground touches the jurisdictional additional ground touches the jurisdictional aspects and thus, goes to the root of the matter. The relevant aspects and thus, goes to the root of the matter. The relevant facts are facts are stated to be emanating from records and do emanating from records and do not call for examination of examination of any fresh facts. Hence, additional grounds are admitted for adjudication facts. Hence, additional grounds are admitted for adjudication purposes. purposes.
8. The assessee essentially essentially raised following grounds:
[i] “non-compliance of section 153C o compliance of section 153C of the Act as per additional ground the Act as per additional ground rendering the assessment order in question to be void, ab rendering the assessment order in question to be void, ab-initio and rendering the assessment order in question to be void, ab challenged to the additions on aspects of merits challenged to the additions on aspects of merits; and [ii] Assessment order passed without approval u/s 153D of the Act and Assessment order passed without approval u/s 153D of the Act and Assessment order passed without approval u/s 153D of the Act and rendering the as rendering the assessment order to be bad in law.”
9. With reference to the additional ground, challenging the assessment With reference to the additional ground, challenging the assessment With reference to the additional ground, challenging the assessment order passed u/s 143(3) of the Act, Ld. order passed u/s 143(3) of the Act, Ld. Counsel for the assessee essentially for the assessee essentially submitted that:- [i] “that a search and seizure operation u/s 132 was carried out at a search and seizure operation u/s 132 was carried out at the a search and seizure operation u/s 132 was carried out at premises of Sh Praveen K Jain on 06.01.2021 during which certain premises of Sh Praveen K Jain on 06.01.2021 during which certain premises of Sh Praveen K Jain on 06.01.2021 during which certain WhatsApp chat pertaining to the appellant were found. The WhatsApp chat pertaining to the appellant were found. The WhatsApp chat pertaining to the appellant were found. The Assessing Officer of the above searched person sent intimation Assessing Officer of the above searched person sent intimation Assessing Officer of the above searched person sent intimation about the whatasap chat to the AO on 28.06.2022. On that basis, about the whatasap chat to the AO on 28.06.2022. On that basis, about the whatasap chat to the AO on 28.06.2022. On that basis, the AO was inclined to reopen the assessment for six AY's including e AO was inclined to reopen the assessment for six AY's including e AO was inclined to reopen the assessment for six AY's including AY 2021-22 under section 153C of the Act under section 153C of the Act. But having done so, the . But having done so, the AO took the view that since the year under consideration is search AO took the view that since the year under consideration is search AO took the view that since the year under consideration is search year, he proceeded with the assessment u/s 143(3) of the year, he proceeded with the assessment u/s 143(3) of the Act. year, he proceeded with the assessment u/s 143(3) of the [ii] that it is a settled law that when provisions of proviso to section settled law that when provisions of proviso to section settled law that when provisions of proviso to section 153C are applied, then date of search is substituted by date of 153C are applied, then date of search is substituted by date of 153C are applied, then date of search is substituted by date of handing over of the documents by the Assessing Officer of the handing over of the documents by the Assessing Officer of the handing over of the documents by the Assessing Officer of the person searched to the Assessing Officer of the othe person searched to the Assessing Officer of the other person (present r person (present assessee). This date was 28.06.2021 which fell in the previous year assessee). This date was 28.06.2021 which fell in the previous year assessee). This date was 28.06.2021 which fell in the previous year 2021-22 and the relevant assessment year was 202 and the relevant assessment year was 2022-2 -23. [iii] in terms of the recording of satisfaction under Section 153C of the n terms of the recording of satisfaction under Section 153C of the n terms of the recording of satisfaction under Section 153C of the Act, i.e., 30.06.2021 by the AO which cons Act, i.e., 30.06.2021 by the AO which construes the date of receipt of trues the date of receipt of assets and documents by the AO of the Assessee (other than one assets and documents by the AO of the Assessee (other than one assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee, the date on searched) as the date of the search on the Assessee, the date on searched) as the date of the search on the Assessee, the date on which the AO of the person other than the one searched assumes which the AO of the person other than the one searched assumes which the AO of the person other than the one searched assumes the possession of the seized assets the possession of the seized assets would be the relevant date for would be the relevant date for applying the provisions of Section 153A of the Act. On that analogy applying the provisions of Section 153A of the Act. On that analogy applying the provisions of Section 153A of the Act. On that analogy insofar as assessee is concerned, insofar as assessee is concerned, the AY 2021-22 would fall in the 22 would fall in the block years in view of the first proviso to section 153C of the Act. If block years in view of the first proviso to section 153C of the Act. If block years in view of the first proviso to section 153C of the Act. If that be the case, that be the case, which is the correct position of law, such which is the correct position of law, such assessment for AY 2021 for AY 2021-22 was required to be necessary necessary completed u/s 153C of the Act after complying with the requirements of the u/s 153C of the Act after complying with the requirements of the u/s 153C of the Act after complying with the requirements of the said section. The AO's of both the person searched and that of the said section. The AO's of both the person searched and that of the said section. The AO's of both the person searched and that of the assessee need to assessee need to record necessary satisfaction u/s 153C of the Act record necessary satisfaction u/s 153C of the Act and thereafter, the AO of the assessee was required to issue a and thereafter, the AO of the assessee was required to issue a and thereafter, the AO of the assessee was required to issue a notice u/s153C calling the assessee to file return of Income after notice u/s153C calling the assessee to file return of Income after notice u/s153C calling the assessee to file return of Income after considering the impact of the material found in the case of the considering the impact of the material found in the case of the considering the impact of the material found in the case of the person searched. In the present case although both the AO's have ched. In the present case although both the AO's have ched. In the present case although both the AO's have recorded separate satisfaction u/s 153C of the Act but the A recorded separate satisfaction u/s 153C of the Act but the AO of the recorded separate satisfaction u/s 153C of the Act but the A appellant failed to issue a notice u/s 153C of the Act without which appellant failed to issue a notice u/s 153C of the Act without which appellant failed to issue a notice u/s 153C of the Act without which assessment u/s 153C could not be completed and has not been assessment u/s 153C could not be completed and has not been assessment u/s 153C could not be completed and has not been completed. [iv] that the Hon'ble Jurisdictional Delhi High Court in the case of Pr CIT he Hon'ble Jurisdictional Delhi High Court in the case of Pr CIT he Hon'ble Jurisdictional Delhi High Court in the case of Pr CIT & Anrs vs Ojjus Medicare P & Anrs vs Ojjus Medicare P Ltd & Ors in dated td & Ors in dated 03.04.2024 came across the identical issue. Your Kind attention is 03.04.2024 came across the identical issue. Your Kind attention is 03.04.2024 came across the identical issue. Your Kind attention is invited to para 119(D) to (F) of the decision invited to para 119(D) to (F) of the decision which is reproduced in which is reproduced in the decision of M.D. Overseas P Ltd vs Dy CIT W.P.(C) 3092/2023 the decision of M.D. Overseas P Ltd vs Dy CIT W.P.(C) 3092/2023 the decision of M.D. Overseas P Ltd vs Dy CIT W.P.(C) 3092/2023 (Del) and same is extracted as under: (Del) and same is extracted as under:
"PARA 119..... D. The First Proviso to Section 153C introduces a legal fiction on The First Proviso to Section 153C introduces a legal fiction on The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for co the basis of which the commencement date for computation of the basis of which the commencement date for co the six year or the ten the six year or the ten-year block is deemed to be the date of year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The receipt of books of accounts by the jurisdictional AO. The receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of identification of the starting block for the purposes of identification of the starting block for the purposes of computation of the six and the ten year period is governed by computation of the six and the ten year period is governed by computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the e First Proviso to Section 153C, which significantly shifts the e First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining reference point spoken of in Section 153A(1), while defining reference point spoken of in Section 153A(1), while defining the point from which the period of the "relevant assessment the point from which the period of the "relevant assessment the point from which the period of the "relevant assessment year" is to be calculated, to the date of receipt of the books of year" is to be calculated, to the date of receipt of the books of year" is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO nts, documents or assets seized by the jurisdictional AO nts, documents or assets seized by the jurisdictional AO of the non of the non-searched person. The shift of the relevant date in searched person. The shift of the relevant date in the case of a non the case of a non-searched person being regulated by the First searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res Proviso of Section 153C(1) is an issue which is no longer res Proviso of Section 153C(1) is an issue which is no longer res integra and integra and stands authoritatively settled by virtue of the stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as decisions of this Court in SSP Aviation and RRJ Securities as decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The well as the decision of the Supreme Court in Jasjit Singh. The well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme aforesaid legal position also stood reiterated by the Supreme aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujit Court in Vikram Sujitkumar Bhatia. The submission of the kumar Bhatia. The submission of the respondents, therefore, that the block periods would have to respondents, therefore, that the block periods would have to respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be reckoned with reference to the date of search can neither be reckoned with reference to the date of search can neither be countenanced nor accepted. be countenanced nor accepted. E. The reckoning of the six AYs' would require one to firstly The reckoning of the six AYs' would require one to firstly The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and ify the FY in which the search was undertaken and ify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to which would lead to the ascertainment of the AY relevant to which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would the previous year of search. The block of six AYs' would the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY consequently be those which immediately precede the AY consequently be those which immediately precede the AY relevant to the year of search. In relevant to the year of search. In the case of a search the case of a search assessment undertaken in terms of Section 153C, the solitary assessment undertaken in terms of Section 153C, the solitary assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would distinction would be that the previous year of search would distinction would be that the previous year of search would stand substituted by the date or the year in which the books stand substituted by the date or the year in which the books stand substituted by the date or the year in which the books of accounts or documents and assets seized are hande of accounts or documents and assets seized are handed over of accounts or documents and assets seized are hande to the jurisdictional AO as opposed to the year of search which to the jurisdictional AO as opposed to the year of search which to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. constitutes the basis for an assessment under Section 153A. constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs' hinges While the identification and computation of the six AYs' hinges While the identification and computation of the six AYs' hinges upon the phrase "immediately preceding the assessment yea upon the phrase "immediately preceding the assessment year upon the phrase "immediately preceding the assessment yea relevant to the previous year" of search, the ten relevant to the previous year" of search, the ten-year period relevant to the previous year" of search, the ten would have to be reckoned from the 31st day of March of the would have to be reckoned from the 31st day of March of the would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, AY relevant to the year of search. This, since undisputedly, AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it "from Explanation 1 of Section 153A requires us to reckon it "from Explanation 1 of Section 153A requires us to reckon it "from the end of the end of the assessment year". This distinction would have the assessment year". This distinction would have to necessarily be acknowledged in light of the statute having to necessarily be acknowledged in light of the statute having to necessarily be acknowledged in light of the statute having consciously adopted the phraseology "immediately preceding" consciously adopted the phraseology "immediately preceding" consciously adopted the phraseology "immediately preceding" when it be in relation to the six when it be in relation to the six-year period and employing the year period and employing the expression "from th expression "from the end of the assessment year" while e end of the assessment year" while speaking of the ten speaking of the ten-year block." Taking cue from the above decision of Hon'ble Jurisdictional Delhi Taking cue from the above decision of Hon'ble Jurisdictional Delhi Taking cue from the above decision of Hon'ble Jurisdictional Delhi High Court and also rel High Court and also relying on the decision of ITO vs Vikram Sujit on the decision of ITO vs Vikram Sujit Kumar Bhatia 453 ITR 417 (SC), CIT vs Jasjit Kumar Bhatia 453 ITR 417 (SC), CIT vs Jasjit Singh CA No.6566 of Singh CA No.6566 of 2023 (SC) dated 26.09.2023, CIT vs RRJ Securities Ltd 380 ITR 612 2023 (SC) dated 26.09.2023, CIT vs RRJ Securities Ltd 380 ITR 612 2023 (SC) dated 26.09.2023, CIT vs RRJ Securities Ltd 380 ITR 612 (Del) and SSP Aviation vs DCIT 346 ITR 177 (Del), the legal (Del) and SSP Aviation vs DCIT 346 ITR 177 (Del), the legal (Del) and SSP Aviation vs DCIT 346 ITR 177 (Del), the legal proposition emerging is that relevant AY's for the purpose of issue of proposition emerging is that relevant AY's for the purpose of issue of proposition emerging is that relevant AY's for the purpose of issue of notice u/s 153C will be counted backwa notice u/s 153C will be counted backward taking the assessment rd taking the assessment year of the search under proviso to sec 153C as the starting point. If year of the search under proviso to sec 153C as the starting point. If year of the search under proviso to sec 153C as the starting point. If period of six years computed from AY 2022 period of six years computed from AY 2022-23 being the year of 23 being the year of search as per proviso to sec 153C(1), the present assessment year search as per proviso to sec 153C(1), the present assessment year search as per proviso to sec 153C(1), the present assessment year i..e AY 2021-22 will fall in th 22 will fall in the block assessment year for which e block assessment year for which assessment year is required to be completed on the basis of material assessment year is required to be completed on the basis of material assessment year is required to be completed on the basis of material found in the case of searched person by taking recourse to section found in the case of searched person by taking recourse to section found in the case of searched person by taking recourse to section 153C of IT Act despite recording satisfaction as per requirement of 153C of IT Act despite recording satisfaction as per requirement of 153C of IT Act despite recording satisfaction as per requirement of 153C but without i 153C but without issuing notice to invoke provision of sec 153C of IT ssuing notice to invoke provision of sec 153C of IT Act. The present issue was identically covered in the decision of Act. The present issue was identically covered in the decision of Act. The present issue was identically covered in the decision of Santosh Hospital P Ltd vs DCIT dated Santosh Hospital P Ltd vs DCIT dated Santosh Hospital P Ltd vs DCIT ITA No.282/Del/2020 dated 03.08.2022. [iv] in view of facts stated above, that assessment under appeal has in view of facts stated above, that assessment under appeal has in view of facts stated above, that assessment under appeal has been framed under incorrect provision of law i.e. 143(3) instead of been framed under incorrect provision of law i.e. 143(3) instead of been framed under incorrect provision of law i.e. 143(3) instead of the same mandated under law to be completed u/s 153C only. The the same mandated under law to be completed u/s 153C only. The the same mandated under law to be completed u/s 153C only. The judicial courts have dealt the issue of assessment completed under judicial courts have dealt the issue of assessment completed under judicial courts have dealt the issue of assessment completed under incorrect section in favour of assessee in the following d incorrect section in favour of assessee in the following decisions: incorrect section in favour of assessee in the following d CIT v. T. Rangroopchand Chordia [2016] 241 Taxman 221 CIT v. T. Rangroopchand Chordia [2016] 241 Taxman 221 CIT v. T. Rangroopchand Chordia [2016] 241 Taxman 221 (Madras HC); (Madras HC); Dr. K.M. Mehaboob v. DCIT [2012] 26 taxmann.com 54 (Kerala Dr. K.M. Mehaboob v. DCIT [2012] 26 taxmann.com 54 (Kerala Dr. K.M. Mehaboob v. DCIT [2012] 26 taxmann.com 54 (Kerala HC); Ashokji Chanduji Thakor v. PCIT [2021] 130 taxmann.com 130 Ashokji Chanduji Thakor v. PCIT [2021] 130 taxmann.com 130 Ashokji Chanduji Thakor v. PCIT [2021] 130 taxmann.com 130 (Guj. HC) Shri Om Prakash Jalkhotia v. ACIT ITA Nos.968, Shri Om Prakash Jalkhotia v. ACIT ITA Nos.968, 969, 970 & Shri Om Prakash Jalkhotia v. ACIT ITA Nos.968, 971/Del./2021 971/Del./2021 Mikado Realtors P. Ltd. ITA no. 50/DEL/2021; Mikado Realtors P. Ltd. ITA no. 50/DEL/2021; Sanjay Sanjay Sanjay Thakhur Thakhur Thakhur v. v. v. The The The DCIT DCIT DCIT (Central (Central (Central Circle) Circle) Circle) In In In ITA ITA ITA no.3559/DEL/2015: no.3559/DEL/2015: DCIT v Vinod DCIT v Vinod Kumar in ITA no. 2550/DEL/2015.”
With reference to the challenge to the With reference to the challenge to the impugned assessment order assessment order passed under section 143(3) of the Act assed under section 143(3) of the Act in question, the Ld. Counsel for the Counsel for the assessee also contended that such order being covered u/s 153B(1)(b) of the contended that such order being covered u/s 153B(1)(b) of the contended that such order being covered u/s 153B(1)(b) of the Act, the approval u/s 153D of the Act was incumbent upon the assessee. Act, the approval u/s 153D of the Act was incumbent upon the assessee. The Act, the approval u/s 153D of the Act was incumbent upon the assessee. approval in the instant case approval in the instant case has been taken from the Ld. Addl. CIT u/s 119 of CIT u/s 119 of the Act and not under section 153D of the Act, rendering such assessment the Act and not under section 153D of the Act, rendering such assessment the Act and not under section 153D of the Act, rendering such assessment order to be invalid. The gist of the submissions made on the point in issue on order to be invalid. The gist of the submissions made on the point in issue on order to be invalid. The gist of the submissions made on the point in issue on behalf of the assessee is noted hereunder is noted hereunder:-
153D of the Act, no order of assessment / As per the provisions of section 153D of the Act, no order of assessment / As per the provisions of section 153D of the Act, no order of assessment / reassessment for any AY's relating to the search action u/s 132 of the Act reassessment for any AY's relating to the search action u/s 132 of the Act reassessment for any AY's relating to the search action u/s 132 of the Act could have been passed by the AO without prior approval of the Joint could have been passed by the AO without prior approval of the Joint could have been passed by the AO without prior approval of the Joint Commissioner. To be precise, the requ Commissioner. To be precise, the requirement of the approval under above irement of the approval under above provision is in relation to the assessment referred in clause (b) of section provision is in relation to the assessment referred in clause (b) of section provision is in relation to the assessment referred in clause (b) of section 153A(1) or those referred in clause (b) of section 1538 of the Act. The 153A(1) or those referred in clause (b) of section 1538 of the Act. The 153A(1) or those referred in clause (b) of section 1538 of the Act. The present assessment relates to AYY 2021 present assessment relates to AYY 2021-22 which covered by section 22 which covered by section 1538(1)(b) of the Act and that is the reason why the AO has completed the (1)(b) of the Act and that is the reason why the AO has completed the (1)(b) of the Act and that is the reason why the AO has completed the assessment u/s 143(3) treating the assessment being the search year assessment u/s 143(3) treating the assessment being the search year assessment u/s 143(3) treating the assessment being the search year assessment. There is mention in para 13 of the assessment order that the approval is There is mention in para 13 of the assessment order that the approval is There is mention in para 13 of the assessment order that the approval is obtained from Addl CIT, Central R obtained from Addl CIT, Central Range 08, New Delhi vide communication ange 08, New Delhi vide communication dated 30.12.2022 (PB 62) and the same is undisputedly obtained on the dated 30.12.2022 (PB 62) and the same is undisputedly obtained on the dated 30.12.2022 (PB 62) and the same is undisputedly obtained on the date of passing of the above impugned order. The request for approval was date of passing of the above impugned order. The request for approval was date of passing of the above impugned order. The request for approval was made by the assessing officer to Addl CIT, Central Range made by the assessing officer to Addl CIT, Central Range-08, New Delhi 08, New Delhi vide e e communication communication communication dated dated dated 29.12.2022 29.12.2022 29.12.2022 (PB (PB (PB 63) 63) 63) and and and the the the above above above communication shows that approval has been sought under section 119 of communication shows that approval has been sought under section 119 of communication shows that approval has been sought under section 119 of IT Act in accordance Board's order dated 15.07.2022 under above section. IT Act in accordance Board's order dated 15.07.2022 under above section. IT Act in accordance Board's order dated 15.07.2022 under above section. Accordingly, the above authority granted approval dated 3 Accordingly, the above authority granted approval dated 30.12.2022 (PB 0.12.2022 (PB 62) and the approval was accorded u/s 119 of IT Act in accordance with 62) and the approval was accorded u/s 119 of IT Act in accordance with 62) and the approval was accorded u/s 119 of IT Act in accordance with CBDT order dated 15.07.2022. The important facts emerging from above CBDT order dated 15.07.2022. The important facts emerging from above CBDT order dated 15.07.2022. The important facts emerging from above details are as under: 1. There is no authority/power/mechanism of granting approval in There is no authority/power/mechanism of granting approval in There is no authority/power/mechanism of granting approval in the provision of s the provision of sec 119 of IT Act which provision merely deals ec 119 of IT Act which provision merely deals with with with the the the condonation/relaxations/clarifications condonation/relaxations/clarifications condonation/relaxations/clarifications to to to mitigate mitigate mitigate hardship to the taxpayers in the taxation administration. No hardship to the taxpayers in the taxation administration. No hardship to the taxpayers in the taxation administration. No burden of compliance is added through the circular/notification burden of compliance is added through the circular/notification burden of compliance is added through the circular/notification issued under above sectio issued under above section. There is no CBDT order found from n. There is no CBDT order found from the research done by the appellant under which approval is the research done by the appellant under which approval is the research done by the appellant under which approval is mandated to be taken by the AO under any CBDT order. As a mandated to be taken by the AO under any CBDT order. As a mandated to be taken by the AO under any CBDT order. As a CBDT order of above file number was found in the matter of no CBDT order of above file number was found in the matter of no CBDT order of above file number was found in the public domain. Without prejudice, the fa public domain. Without prejudice, the fact remains that the emains that the department has taken approval, be it rightly or wrongly but u/s department has taken approval, be it rightly or wrongly but u/s department has taken approval, be it rightly or wrongly but u/s 119 of IT Act not u/s 153D of the Act before passing of the 119 of IT Act not u/s 153D of the Act before passing of the 119 of IT Act not u/s 153D of the Act before passing of the impugned assessment order. impugned assessment order.
2. In the absence of any such approval taken by the assessing In the absence of any such approval taken by the assessing In the absence of any such approval taken by the assessing officer prior to passing o officer prior to passing of order u/s 143(3), the resultant f order u/s 143(3), the resultant assessment order is non assessment order is non-est and invalid in law. The wordings est and invalid in law. The wordings and language used in Sec. 153D of the Act and the heading "prior and language used in Sec. 153D of the Act and the heading "prior and language used in Sec. 153D of the Act and the heading "prior approval necessary for assessment in cases of search or approval necessary for assessment in cases of search or approval necessary for assessment in cases of search or requisition" to Sec. 153D do not leave i requisition" to Sec. 153D do not leave iota of doubt about the very ota of doubt about the very intention of the legislature to make the compliance of sec153D intention of the legislature to make the compliance of sec153D intention of the legislature to make the compliance of sec153D mandatory. It is a trite law that if a provision is mandatory, an mandatory. It is a trite law that if a provision is mandatory, an mandatory. It is a trite law that if a provision is mandatory, an act done in breach thereof will be invalid. act done in breach thereof will be invalid.
The CBDT Circular No. 3 of 2008, dated 12.3.2008, The CBDT Circular No. 3 of 2008, dated 12.3.2008, clarifies that The CBDT Circular No. 3 of 2008, dated 12.3.2008, the legislature in its highest wisdom made it compulsory that the the legislature in its highest wisdom made it compulsory that the the legislature in its highest wisdom made it compulsory that the assessments of search cases should be made with the prior assessments of search cases should be made with the prior assessments of search cases should be made with the prior approval of superior authority, so that the superior authority approval of superior authority, so that the superior authority approval of superior authority, so that the superior authority applies his mind on the materials and other attending applies his mind on the materials and other attending applies his mind on the materials and other attending circumstances on the basis of which the officer is making the circumstances on the basis of which the officer is making the circumstances on the basis of which the officer is making the assessment and after due application of mind and on the basis of assessment and after due application of mind and on the basis of assessment and after due application of mind and on the basis of seized materials, the superior authority have to approve the draft seized materials, the superior authority have to approve the draft seized materials, the superior authority have to approve the draft Assessment order. To support the above proposition of law, Assessment order. To support the above proposition of law, Assessment order. To support the above proposition of law, reliance is placed on following decisions: iance is placed on following decisions: * Ajay Sharma, New Delhi vs DCIT, Ghaziabad ITAT Delhi * Ajay Sharma, New Delhi vs DCIT, Ghaziabad ITAT Delhi - * Ajay Sharma, New Delhi vs DCIT, Ghaziabad ITAT Delhi ITA.No.3554/Del./2015 dt.14.2.2020; ITA.No.3554/Del./2015 dt.14.2.2020; * PCIT v. Sunrise Finlease (P.) Ltd. 252 Taxman 407 (Guj) (HC); PCIT v. Sunrise Finlease (P.) Ltd. 252 Taxman 407 (Guj) (HC); PCIT v. Sunrise Finlease (P.) Ltd. 252 Taxman 407 (Guj) (HC); * Shri Jaykumar Uttamchand Pokarna ITAT Pune Shri Jaykumar Uttamchand Pokarna ITAT Pune -ITA NO. Shri Jaykumar Uttamchand Pokarna ITAT Pune 549/PN/2011, dt.5.10.2012; PN/2011, dt.5.10.2012; CIT vs. Shri. Akil Gulamali Somji ITA (L) HC Bom NO.1416 CIT vs. Shri. Akil Gulamali Somji ITA (L) HC Bom NO.1416-19 CIT vs. Shri. Akil Gulamali Somji ITA (L) HC Bom NO.1416 OF 2012 dt. 15.1.2013 SC dismissed SLP no.19389 of 2013 on OF 2012 dt. 15.1.2013 SC dismissed SLP no.19389 of 2013 on OF 2012 dt. 15.1.2013 SC dismissed SLP no.19389 of 2013 on 5.8.2013; * Ch. Krishna Murthy Ch. Krishna Murthy dt.13.2.2015 dt.13.2.2015 The above legal ground had been dismissed by The above legal ground had been dismissed by the Ld CIT(A) In para 9.3 the Ld CIT(A) In para 9.3 page 29 of the Appellate order with the observation that since the page 29 of the Appellate order with the observation that since the page 29 of the Appellate order with the observation that since the Impugned order is not u/s 153C of the Act and therefore there was no Impugned order is not u/s 153C of the Act and therefore there was no Impugned order is not u/s 153C of the Act and therefore there was no requirement for the AO to obtain prior approval u/s 153D of the Act. The requirement for the AO to obtain prior approval u/s 153D of the Act. The requirement for the AO to obtain prior approval u/s 153D of the Act. The above view of the Ld above view of the Ld CIT(A) Ld CIT(A) is contrary to the provisions of the CIT(A) Ld CIT(A) is contrary to the provisions of the section 153D of the Act which requires the prior approval even in the cases section 153D of the Act which requires the prior approval even in the cases section 153D of the Act which requires the prior approval even in the cases where the assessment is completed u/s 143(3) in the year of search, the where the assessment is completed u/s 143(3) in the year of search, the where the assessment is completed u/s 143(3) in the year of search, the year covered by section 1538(1)(b) of the Act. It may year covered by section 1538(1)(b) of the Act. It may kindly be noted that kindly be noted that since the addition is made on the basis of the material found in the case of since the addition is made on the basis of the material found in the case of since the addition is made on the basis of the material found in the case of search on other assessee, the assessment is clearly the assessment search on other assessee, the assessment is clearly the assessment search on other assessee, the assessment is clearly the assessment covered by section 1538(1)(b) of the Act requiring prior approval u/s 153D covered by section 1538(1)(b) of the Act requiring prior approval u/s 153D covered by section 1538(1)(b) of the Act requiring prior approval u/s 153D of the Act and absence of such approval invalidates the assessment order absence of such approval invalidates the assessment order absence of such approval invalidates the assessment order impugned in the present appeal. The appellant has requested number of impugned in the present appeal. The appellant has requested number of impugned in the present appeal. The appellant has requested number of times to the AO about the circular on the basis of which approval has been times to the AO about the circular on the basis of which approval has been times to the AO about the circular on the basis of which approval has been obtained u/s 119 before passing of the order. But the obtained u/s 119 before passing of the order. But the Ld AO is unable to Ld AO is unable to provide such circular and appellant is unable to find such circular.” provide such circular and appellant is unable to find such circular.” provide such circular and appellant is unable to find such circular.”
The Ld. Counsel for the assessee then contended that the assessment The Ld. Counsel for the assessee then contended that the assessment The Ld. Counsel for the assessee then contended that the assessment order giving rise to present appellate proceedings, is not sustainable in law on order giving rise to present appellate proceedings, is not sustainable in law on order giving rise to present appellate proceedings, is not sustainable in law on both Courts.
12. The Ld.Sr.DR for the The Ld.Sr.DR for the Revenue, on the other hand, relied upon the actions on the other hand, relied upon the actions taken by the AO and the Ld.CIT(A). On the taken by the AO and the Ld.CIT(A). On the additional ground raised by the assessee, challenging the jurisdiction assessee, challenging the jurisdiction assumed towards regular assessment assumed towards regular assessment instead of proceedings u/s 153 instead of proceedings u/s 153C of the Act, the Ld.Sr.DR for the C of the Act, the Ld.Sr.DR for the Revenue pointed out that the provision of section 143(2) r.w.s 143(3) of the Act entitles pointed out that the provision of section 143(2) r.w.s 143(3) of the Act entitles pointed out that the provision of section 143(2) r.w.s 143(3) of the Act entitles the AO to make regular assessment subject the AO to make regular assessment subject to available time limit for invoking time limit for invoking such jurisdiction. The jurisdiction such jurisdiction. The jurisdiction available for making regular assessment king regular assessment Page | 11 143(2) of the Act is very wide and u/s 143(2) of the Act is very wide and broader and as long as time limit is as long as time limit is available for issuance of notice u/s 143(2) of the Act available for issuance of notice u/s 143(2) of the Act, the notice issued under , the notice issued under section 143(2) of the Act cannot be assailed section 143(2) of the Act cannot be assailed. There is no statutory bar on . There is no statutory bar on the AO to frame the assessment u AO to frame the assessment under section 143(3) of the Act. The Ld. Sr. DR 143(3) of the Act. The Ld. Sr. DR for the Revenue thus, contended that no fault can be found for the Revenue thus, contended that no fault can be found with assessment with assessment order framed under section 143(3) order framed under section 143(3) of the Act.
We have carefully considered considered the rival submissions and perused the case and perused the case records.
We shall advert to the additional ground at the threshold We shall advert to the additional ground at the threshold, since it strikes since it strikes to the root of the matter. As per the additional ground, the assessee seeks to to the root of the matter. As per the additional ground, the assessee seeks to to the root of the matter. As per the additional ground, the assessee seeks to submit that pursuant to search and seizure operation carried submit that pursuant to search and seizure operation carried out u/s 13 out u/s 132 of the Act on 06.01.2021, a satisfaction note was drawn under section nder section 153C of the Act by the AO of the searched person that seized documents/digital the Act by the AO of the searched person that seized documents/digital the Act by the AO of the searched person that seized documents/digital data/information found in the course of search indicates that the other person data/information found in the course of search indicates that the other person data/information found in the course of search indicates that the other person namely, the assessee herein has purchased a property in which ssee herein has purchased a property in which some cash ssee herein has purchased a property in which component is involved and such information/document etc. component is involved and such information/document etc. has bearing has bearing on the determination of total income of other person namely, the assessee. determination of total income of other person namely, the assessee. determination of total income of other person namely, the assessee. 13.1. The relevant satisfaction note drawn by the AO The relevant satisfaction note drawn by the AO of the searched person is of the searched person is reproduced as under:-
1.
Name of the group, if any, searched Name of the group, if any, searched HANS Group 2. Name of the searched assessee in Name of the searched assessee in M/s. Jainco Ltd., whose case assets (money, b whose case assets (money, bullion, G-5, Sikka Complex, Preet Vihar, New Delhi 5, Sikka Complex, Preet Vihar, New Delhi- jewellery or other valuable valuable article or 110092. thing) or papers (books of account or thing) or papers (books of account or documents) seized u/s 132 of the Act ) seized u/s 132 of the Act 3. PAN of searched person AADCJ6207E 4. Name and address of the person to Name and address of the person to Smt. Mukul Rani Thakur, whom seized assets/papers as in (2) whom seized assets/papers as in (2) R/o-B-132, Preet Vihar, Delhi-110002. 110002. above belong 5. PAN of the other persons AERPT3941E 6. Identification of seized assets/papers of seized assets/papers (i) cloned data of Vaibhav Jain’s mobile marked Jain’s mobile marked which in the opinion of the AO of the which in the opinion of the AO of the as Annexure A-4 seized from the premise at G 4 seized from the premise at G- searched assessee (S.No.2), belong to searched assessee (S.No.2), belong to 2, Plot No.5, Sikka Complex, Preet Vi , Preet Vihar, New the other person (S.No4) Delhi.
7. (i) Details of panchnam (i) Details of panchnama & annexure Panchnama at G-2, Plot No.5, Si 2, Plot No.5, Sikka Complex, through through which which relevant relevant Preet VIhar, New Delhi, Annexure-A4 Preet VIhar, New Delhi, Annexure asset/document asset/document was was seized/requisitioned Page | 12 (ii) Date of above panchnama (ii) Date of above panchnama 10.01.2021 (iii) Address of the place/premises from (iii) Address of the place/premises from G-2, Plot No.5, Sikka Complex 2, Plot No.5, Sikka Complex, Preet Vihar, where where asset/paper asset/paper was was New Delhi-110092. seized/impounded (iv) (iv) Description Description of of r relevant During the course of search u/s 132 of the Act During the course of search u/s 132 of the Act asset/paper(s) conducted at G-2, Plot No.5, Sikka Complex, ot No.5, Sikka Complex, Preet Vihar, New Delhi-110092 110092 following following assets/ documents/digital data were seized. /digital data were seized. Cloned data of Vaibhav Jain's mobile marked Jain's mobile marked as Annexure A-4 containing images of kachchi 4 containing images of kachchi parchi of whatsapp chat between Vaibhav Jain parchi of whatsapp chat between Vaibhav Jain and thakur having the details of total sale and thakur having the details of total sale consideration of the property at B-132, First consideration of the property at B Floor, Preet Vihar, in which unaccounted cash Floor, Preet Vihar, in which unaccounted cash amounting to Rs. 1,05,50,000/ g to Rs. 1,05,50,000/- received by Smt. Mukul Rani Thakur. (v) The brief reasons on the basis of (v) The brief reasons on the basis of While examining the seized assets and seized While examining the seized assets and seized which the AO reached to the conclusion which the AO reached to the conclusion documents/digital data and the data seized documents/digital data and the data seized that the relevant seized asset/paper that the relevant seized asset/paper and Smt. Mukul Rani Thakur i.e. the person and Smt. Mukul Rani Thakur i.e. the person belongs to the other persons (use belongs to the other persons (use other than the searched person. the basis of other than the searched person. the basis of Annexure if required). the the documents/digital documents/digital data data seized seized and and information contained therein, I am satisfied information contained therein, I am satisf that action u/s 153C of I.T. Act, 1961 is that action u/s 153C of I.T. Act, 1961 is required in the case of Smt. Mukul Rani required in the case of Smt. Mukul Rani Thakur. Thakur. Accordingly, Accordingly, the the AO AO holding holding jurisdiction over the case of Smt. Mukul Rani jurisdiction over the case of Smt. Mukul Rani Thakur is being intimated to take action u/s Thakur is being intimated to take action u/s 153C r.w.s. 153A of the I.T. Act, 1961. 153C r.w.s. 153A of the I.T. Act, 1961.
Assessment Years involved Assessment Years involved 2015-16 to 2021-22 13.2. It is further noticed that based on satisfaction note It is further noticed that based on satisfaction note and the seized and the seized documents/digital data pertaining to the assessee, documents/digital data pertaining to the assessee, as supplied by the AO of the as supplied by the AO of the searched person, the AO of the assessee of the assessee drew the satisfaction note in relation isfaction note in relation to the assessee which reads as under: to the assessee which reads as under:- “For initiating proceedings under Section 153C read with section For initiating proceedings under Section 153C read with section For initiating proceedings under Section 153C read with section 153A of the Income Tax Act. 1961 in the case of Smt. Mukul Rani 153A of the Income Tax Act. 1961 in the case of Smt. Mukul Rani 153A of the Income Tax Act. 1961 in the case of Smt. Mukul Rani Thakur (PAN: AERPT3941E), AYs. 2015 Thakur (PAN: AERPT3941E), AYs. 2015-16 to 2021-22. Action under section 132 of the Income Tax Act was conducted in HANS er section 132 of the Income Tax Act was conducted in HANS er section 132 of the Income Tax Act was conducted in HANS Group of cases by Investigation wing, New Delhi on 06.01.2021. It has Group of cases by Investigation wing, New Delhi on 06.01.2021. It has Group of cases by Investigation wing, New Delhi on 06.01.2021. It has been brought to the notice of the undersigned by the AO of M/s. Jainco been brought to the notice of the undersigned by the AO of M/s. Jainco been brought to the notice of the undersigned by the AO of M/s. Jainco Ltd. (in the instant case both the AO is same), being on Ltd. (in the instant case both the AO is same), being one of the persons e of the persons covered in group search and in whose case action under section 132 of the covered in group search and in whose case action under section 132 of the covered in group search and in whose case action under section 132 of the Income tax Act was taken, that during the search and seizure action, the Income tax Act was taken, that during the search and seizure action, the Income tax Act was taken, that during the search and seizure action, the Assets and documents/digital data and information contained seized Assets and documents/digital data and information contained seized Assets and documents/digital data and information contained therein relate to, Smt. M therein relate to, Smt. Mukul Rani Thakur the person other than the ukul Rani Thakur the person other than the searched person. The Assessing officer of the searched person has searched person. The Assessing officer of the searched person has searched person. The Assessing officer of the searched person has recorded his satisfaction dated 28.06.2022 that seized Assets and recorded his satisfaction dated 28.06.2022 that seized Assets and recorded his satisfaction dated 28.06.2022 that seized Assets and documents/digital, data and information contained therein relate to the documents/digital, data and information contained therein relate to the documents/digital, data and information contained therein relate to the assessee i.e. Smt. Mukul Rani Thakur i.e. Smt. Mukul Rani Thakur Premises from where assets and documents/digital data found and seized: Premises from where assets and documents/digital data found and seized: Premises from where assets and documents/digital data found and seized: Premises at G-2, Plot No.5, Sikka Complex, Preet Vihar, New Delhi. 2, Plot No.5, Sikka Complex, Preet Vihar, New Delhi. Annexure Page No./File Remarks Remarks Description A-4 Cloned data Cloned data of Vaibhav Jain's mobile marked as Annexure Cloned data of Vaibhav Jain's mobile marked as Annexure Cloned data of Vaibhav Jain's mobile marked as Annexure of Vaibhav A A-4 seized from the premise at G-2, Plot No.
5. Sikka 2, Plot No.
Sikka Jain’s mobile Complex, Preet Vihar, New Delhi having the details of the Complex, Preet Vihar, New Delhi having the details of the Complex, Preet Vihar, New Delhi having the details of the i-phone. actual sale consideration of the property at B actual sale consideration of the property at B-132, First actual sale consideration of the property at B Floor, Preet Vihar, an Floor, Preet Vihar, and payments in cash thereof, it is d payments in cash thereof, it is noticed that, Smt. Mukul Rani Thakur has sold the above noticed that, Smt. Mukul Rani Thakur has sold the above noticed that, Smt. Mukul Rani Thakur has sold the above said property in which amount of Rs. 1,05,50,000/ said property in which amount of Rs. 1,05,50,000/- was said property in which amount of Rs. 1,05,50,000/ received in cash by Smt. Mukul Rani Thakur. received in cash by Smt. Mukul Rani Thakur. received in cash by Smt. Mukul Rani Thakur.
After examining the seized documents/digital data and informa After examining the seized documents/digital data and information After examining the seized documents/digital data and informa contained therein, it is observed that the assessee i.e. Smt. Mukul Rani contained therein, it is observed that the assessee i.e. Smt. Mukul Rani contained therein, it is observed that the assessee i.e. Smt. Mukul Rani Thakur has purchased the above mentioned property in which huge.cash Thakur has purchased the above mentioned property in which huge.cash Thakur has purchased the above mentioned property in which huge.cash component involved thereof. After examining the documents/digital data component involved thereof. After examining the documents/digital data component involved thereof. After examining the documents/digital data and information contained therein, I a and information contained therein, I am satisfied that documents/digital m satisfied that documents/digital data and information contained therein, also relate to Smt. Mukul Rani data and information contained therein, also relate to Smt. Mukul Rani data and information contained therein, also relate to Smt. Mukul Rani Thakur and have a bearing on the determination of total income of this Thakur and have a bearing on the determination of total income of this Thakur and have a bearing on the determination of total income of this person. In view of the same, I am further satisfied that it is a fit case for person. In view of the same, I am further satisfied that it is a fit case for person. In view of the same, I am further satisfied that it is a fit case for initiating proceedings u/s 153C nitiating proceedings u/s 153C of the Income Tax Act. 1961 for the A.Ys. of the Income Tax Act. 1961 for the A.Ys. 2015-16 to 2020-21. Proceeding u/s 143(3) of the Income Tax Act, 1961 is 21. Proceeding u/s 143(3) of the Income Tax Act, 1961 is 21. Proceeding u/s 143(3) of the Income Tax Act, 1961 is also being initiated for A.Y. 2021 also being initiated for A.Y. 2021-22 by issuance of notice u/s 143(2) of the 22 by issuance of notice u/s 143(2) of the Act.
Accordingly, notices u/ Accordingly, notices u/s 153C for the A.Ys. 2015-16 to 2020 16 to 2020-21 and notice u/s 143(2) for AY 2021 notice u/s 143(2) for AY 2021-22 are being issued as per provisions of the 22 are being issued as per provisions of the income Tax Act, 1961. income Tax Act, 1961.” Page | 14 13.3. On perusal of the satisfaction note of the searched person, it is observed On perusal of the satisfaction note of the searched person, it is observed On perusal of the satisfaction note of the searched person, it is observed that Assessment Year involved is that Assessment Year involved is shown to be 2015-16 to Assessment Year 16 to Assessment Year 2021-22. The AO of the assessee 22. The AO of the assessee, in turn, framed the satisfaction note for framed the satisfaction note for initiation of proceedings u/s 153C of the Act for Assessment Year 2015 initiation of proceedings u/s 153C of the Act for Assessment Year 2015-16 to initiation of proceedings u/s 153C of the Act for Assessment Year 2015 2020-21. With reference to Assessment Year 2021 21. With reference to Assessment Year 2021-22 in question, 22 in question, the AO proceeded to invoke the regular assessment proceedings by issuance of notice proceeded to invoke the regular assessment proceedings by issuance of notice proceeded to invoke the regular assessment proceedings by issuance of notice u/s 143(2) of the Act. In this backdrop, the assessee contends that in the light u/s 143(2) of the Act. In this backdrop, the assessee contends that in the light u/s 143(2) of the Act. In this backdrop, the assessee contends that in the light of provision of section 153C of the Act, data of search stands of provision of section 153C of the Act, data of search stands substituted by substituted by the data of handing the documents by the AO of the person searched to the AO ing the documents by the AO of the person searched to the AO ing the documents by the AO of the person searched to the AO of the other person namely, the present assessee. The date of handing over is of the other person namely, the present assessee. The date of handing over is of the other person namely, the present assessee. The date of handing over is 21.06.2021 which falls in previous year 202 21.06.2021 which falls in previous year 2021-22 relevant to Assessment Year relevant to Assessment Year 2022-23 by applying the proviso by applying the proviso to section 153C of the Act. The of the Act. The immediate preceding year prior to the year of search i.e. AY 2021 preceding year prior to the year of search i.e. AY 2021-22 in question would fall 22 in question would fall in block years having regard to proviso to section 153C of the Act. in block years having regard to proviso to section 153C of the Act. in block years having regard to proviso to section 153C of the Act. Consequently, it was incumbent upon AO to assess the alleged und Consequently, it was incumbent upon AO to assess the alleged undisclosed Consequently, it was incumbent upon AO to assess the alleged und income pertaining to AY 2021 income pertaining to AY 2021-22 in the hands of the assessee under section 22 in the hands of the assessee under section 153C of the Act and such assessment of income emanating from search is 153C of the Act and such assessment of income emanating from search is 153C of the Act and such assessment of income emanating from search is outside the scope of section 143(3) of the Act. outside the scope of section 143(3) of the Act.
We find substantial force in the plea raised on b We find substantial force in the plea raised on behalf of the assessee ehalf of the assessee. While search in the instant case was carried on 06.01.2021 i.e. previous year hile search in the instant case was carried on 06.01.2021 i.e. previous year hile search in the instant case was carried on 06.01.2021 i.e. previous year relevant to Assessment Year 2021 relevant to Assessment Year 2021-22, the documents were handed over in the 22, the documents were handed over in the previous year relevant to Assessment Year 2022 previous year relevant to Assessment Year 2022-23. Based on such Based on such matrix, the assessment upto Assessment Year 2021 ssessment upto Assessment Year 2021-22 stood covered within ambit of 22 stood covered within ambit of section 153C of the Act. This being so section 153C of the Act. This being so, domain for assessment domain for assessment qua undisclosed income for Assessment Year 2021 for Assessment Year 2021-22 falls within sweep of section 22 falls within sweep of section 153C of the Act. The AO has committed 153C of the Act. The AO has committed substantive error in proper error in proper appreciation of jurisdictional provisions of section 153C of the Act by of jurisdictional provisions of section 153C of the Act by of jurisdictional provisions of section 153C of the Act by excluding Assessment Year 2021 excluding Assessment Year 2021-22 from the ambit of section 153C of the Act 22 from the ambit of section 153C of the Act erroneously based on actual date of search rather than based on date of erroneously based on actual date of search rather than based on date of erroneously based on actual date of search rather than based on date of receipts of incriminating documents. s of incriminating documents. In order to frame assessment based on In order to frame assessment based on 153A r.w.s. 153C of the Act. 153A r.w.s. 153C of the Act.
The regular assessment passed assessment passed by issuance of notice u/s 1 u/s 143(2) of the Act without aid of section 153C of the Act out aid of section 153C of the Act despite ‘satisfaction note’ from AO of despite ‘satisfaction note’ from AO of searched person thus, is not supportable in law. The is not supportable in law. The impugned impugned assessment framed under section 143(3) of the Act thus, is void 143(3) of the Act thus, is void ab-initio as rightly pleaded as rightly pleaded on behalf of the assessee. Hence, the assessment order . Hence, the assessment order passed is vitiated in passed is vitiated in law and requires to be quashed at the threshold. to be quashed at the threshold.
In the light of delineation, we do not consider it necessary delineation, we do not consider it necessary on other legal aspects and aspects of merits raised aspects and aspects of merits raised to indulge.